Chennai: After seven straight years of losses, Ramco Systems Ltd, which sells enterprise software and services, is expecting to break even in the year ending March, thanks to its South African business and increased productivity. Adding to the optimism are Internet-enabled enterprise resource planning (ERP) offerings launched earlier this year that the company claims are “gathering momentum in the Indian market”.
“Ramco is in the process of transformation. We are moving away from the ‘frog-in-the-well’ syndrome and, if all goes well, we will be earning profits this year,” said Kamesh Ramamoorthy, chief operating officer. “We have been saying it for a long time, but efforts are on to break even this year.”
Ramco’s South African business is expected to contribute 20% of total revenues this fiscal.
For the year ended March, Ramco reported a net profit of Rs10.48 crore but that was only because of exceptional income from selling its office building to its parent Ramco Group, for around Rs43 crore. Otherwise, the last time that Ramco actually reported a profit was in fiscal 2001.
Optimistic: Ramco System’s COO Kamesh Ramamoorthy.
In South Africa, Ramco’s subsidiary, Ramco Systems South Africa, entered into a joint venture with Data World (Pty) Ltd, an information and communication technology company, and floated a company named CityWorks Pty Ltd that provides e-governance solutions to local government bodies there. The joint venture, for instance, has developed technology solutions for eThekwini Municipality which oversees Durban and provides services to some 3.2 million.
While the joint venture was formed in 2005, this year is the first time revenues are being generated from Ramco.
“Local government bodies are looking to upgrade their systems ahead of the World Cup Soccer that South Africa is going to host in 2010. With around 50-60 small municipalities, 30 mid-sized and 10 large municipalities, South Africa offers huge potential in terms of providing e-governance solutions,” says Ramamoorthy.
Typical value of such contracts would be anywhere from $3-20 million, depending on the size of the municipality, Ramamoorthy said.
As for the company’s OnDemand ERP offerings, he said Ramco now has 1,250 users and is looking to increase that to around 6,000 by March.
Ramco has also put in place a slew of measures to increase productivity by 20-25%, said Ramamoorthy, including firing the bottom 10%, or around 200 employees, based on poor performance. It has also tied up with Salesforce.com, a provider of on-demand customer relationship management services, for improving the firm’s sales capabilities, he added.
Ramco is targeting a growth rate of around 25% in terms of revenues through fiscal 2009, up from revenue of Rs203.7 crore as on 31 March.